In today’s labor market report from the U.S. Bureau of Labor Statistics, September saw a further 263,000 decline in the number of jobs in the country. Against most expectations, this was a worse number than in August (-201,000), but it was better than in July (-304,000). The biggest drop of all in the downturn was in January of this year at -741,000. The majority of analysts had been expecting the September figure to be about -175,000.

Many of the leading economic indicators are going to fluctuate between good news and bad news for a while. That’s what happens at the bottom of a cycle. The unemployment rate remains below 10.0% at 9.8%. This is somewhat misleading, however, since the “discouraged worker” effect has undoubtedly come into play. A lot of otherwise prospective job seekers have given up on their searches until better times return.

Full-time vs part-time

Total jobs lost have now topped seven million. This has resulted from 21 straight periods of month-to-month job declines. The minus-seven million figure understates the problem. An increase in lower-paying and less secure part-time jobs has brought the net figure down while full-time job losses have shot past eight million. But it is also a matter of how one looks at the data, as will be set out in the percentage change commentary below.

But first, consider where the largest job losses have come. In September, it was in construction (-64,000), government (-53,000), manufacturing (-51,000) and retail trade (-38,000). The retail number indicates that the average consumer is still standing on the sidelines. And government job cuts are new. They are the fallout from lower tax revenue.

Longer-term trends

It is interesting to look at the change in U.S. employment over the longer term. Versus January 2000 at the start of this decade, the following sectors have current employment levels that are considerably below what they were then: manufacturing, construction, retail and information services. Sectors with job levels now that are approximately the same as they were in January 2000 are transportation/warehousing and financial activities. Where the number of jobs is considerably higher is in education and health, leisure and hospitality and government (despite the recent relatively modest declines).

The good news

Not to belabor the bad news on the jobs front, but considerable encouragement can be taken from the year-over-year percentage changes. In almost all sectors, the year-over-year change in jobs has either stabilized or is starting to climb out of a hole. In fact, the only two sectors where the trend line is continuing to plunge are construction and government.

With respect to the former, the architectural and engineering services employment decline was less severe in September than in August. This may be an early indicator of more work coming in the government stimulus area, which will help to bring on-site construction back into favor in a lagged manner. It is also remarkable that employment in computer systems design work has only now dropped to 0% on a year-over-year basis, after staying positive through the recession and going back all the way to early 2004.

Gaming vs autos and parts employment

This final section looks at a comparison that in some senses sums up the changes that have been underway in the economies of the industrialized world. In January 2000, U.S. employment in the gaming industry (mainly casinos) was almost exactly the same as in the auto and parts sectors. Lately, jobs in the gaming community have been coming under fire, but to nothing like the same degree as in vehicle production. Compared with that January 2000 starting point, the number of gaming jobs in September 2009 is +10% while the comparable number for old-line vehicle production is -50%. This highlights a remarkable shift in the economy away from manufacturing and towards services.